Qualcomm’s Consolidation Should Lead to More New Highs

Qualcomm (QCOM[1]) — This stock was included on my list of Top Stocks to Buy for October[2], when it was trading below $69, and was last reviewed on Nov. 15[3] near $71.

The company is a leader in developing products and services based on its advanced wireless broadband technology. It expects solid chipset sales throughout the coming year, and it is believed its Snapdragon chipset will provide an advantage in the wireless area over competitors. It has a strong royalty base in markets like China, which are converting from 2G to 3G.

In the past week, consensus EPS estimates for fiscal year (FY) 2013, ended in September, have been raised to $5.17 from $5.08. And FY 2014 estimates have been increased to $5.63 from $5.56. S&P has a “five-star strong buy” rating on the stock and raised its 12-month price target to $90 from $85.

A cup-and-handle formation consolidated into a rectangle that traded sideways from September to November. Then, a mid-November breakout resulted in a new high. It now appears to be consolidating again with support at about $73.

Buy QCOM at the current price with a trading objective of $80; however, investors may buy it as a long-term hold with an objective north of $100.

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